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The Week Observed, February 24, 2017

By Joe Cortright

24.2.2017

What City Observatory did this week

1.Busting the urban myth about high income housing and affordability. One of the most widespread beliefs about housing is that the construction of new high income housing somehow makes the housing affordability problem worse. Widely believed, but wrong. We marshal the economic evidence for filtering–how as apartments and houses age, they decline in relative price and become more affordable to progressively lower income households. More importantly, failing to building more high income housing has the effect of pushing higher income households down-market, leading them to bid up the price of more modest housing that would otherwise be occupied at lower prices or rents by the less affluent.

2. Playing Apart. In our report Less in Common, we described the multi-faceted trend of American’s living their lives apart from one another, and segregating by income, interests and social class. This trend is most evident in recreation, as Americans have fitted their homes and yards with pools, play courts, and swing sets, and foregone the public park. But as Samsung highlighted in its commercial “A Perfect Day” there’s still a longing or a lingering aspiration to have the kinds of public spaces that we can all share.

3. Cursing the candle. There’s growing evidence that some areas of Detroit are experiencing a rebound. As we chronicled at City Observatory, Wayne County has racked up five years of consecutive job gains. But some critics are saying that claims of a rebound are overblown, and argue that the uneven geography of job and population growth within the city is aggravating inequality. We consider these claims, but note that any turnaround its going to start small, and at least initially take hold only in a few places. Indeed: building critical mass in a few locations is essential to achieving the kind of urban spillovers that make development viable and self-sustaining. Its not realistic to expect that there’s any solution to Detroit’s woes that will fix everything, everywhere for everyone all at once.

Must read

1. Taxing Parking. We’re a little late to the party here, but several cities in the UK are taking a look at copying a very successful policy implemented by the city of Nottingham. They’ve imposed a tax on private, employer provided parking and used the proceeds to help subsidize transit service, expand the city’s tram (light rail) system, and make improvements to bike and pedestrian facilities. Like the purely private efforts of employer Lyft in San Francisco, the net effect of this system is to encourage those with alternatives to driving to work to use them, and provides a ready source of funds for encouraging greener commuting.

2. Want to reduce traffic? Build more housing. Writing in Bethesda Magazine, Ben Ross makes the case that this Washington DC suburb is basing its future planning efforts on outdated projections of automobile use. As the city’s demographic profile changes and as more people are seeking to live in walkable, mixed use communities, increasing population is no longer associated with greater and greater levels of driving. Rather than increasing as projected by traditional traffic models, traffic levels on some of the city’s key arterials have actually gone down. Instead of ignoring this trend, the city ought to take advantage of it by encouraging more housing in locations that enable people to drive less.

3. Ford’s CEOs says the future of cities has almost nothing to do with cars. We singled out Ford for criticism a couple of weeks back, noting that their view of the future of cities was very vehicle and travel centric. Despite the hopeful sound the the title of this article in Business Insider, while Ford’s Mark Fields is de-emphasizing cars, the core of their vision is about moving people and vehicles by throwing more technology at cities. As he puts it: there goals is shifting from getting cars through an area to “how do we maximize people getting through the areas.” But as we pointed out, maybe the objective of city planning ought to be to prioritize the experience of the people in cities rather than those who are simply passing through. If we arranged land uses so that we didn’t have to travel as far or as often, we could avoid a lot of the needless and disruptive investment in having to move so many people in the first place.

New Research

1. The economic implications of housing supply. Two of the nation’s leading urban economists, Ed Glaeser and Joe Gyourko, have collaborated on an essay exploring housing’s link to urban prosperity for a forthcoming issue of the Journal of Economic Perspectives. They make the key point that the variations in housing costs among locations in the US have relatively little to do with variations in construction costs, and almost everything to do with land costs. While the price of land is influenced to some degree by geography (elevation and bodies of water restrict where cities can expand), the big variable is local land use policies: how much is permitted to be built and in what locations. They conclude that about three-quarters of American homeowners live in housing that is priced at or below its marginal cost of profitable production, but one quarter of homes, mostly in tight coastal markets command prices much higher than typical construction costs. In addition to addressing housing affordability, Glaeser and Gyourko also examine the claim by Enrico Moretti that constrained housing supplies in highly productive metropolitan areas (like San Francisco) have the effect of reducing national income. While they concur in the logic of this analysis, they tend to think that the magnitude of the cost to the national economy is less than estimated by Moretti.

2. Visualizing neighborhood change. Ken Steif of Urban Spatial has used longitudinal census data from the period 1990 through 2010 to compare neighborhood level changes in income, housing values and educational attainment in a series of 29 mostly “rust belt” cities. You’ll find a series of maps that illustrate which neighborhoods are gaining or losing ground relative to city-wide average changes. And Spatial Data also presents regression results that show the which neighborhood characteristics in 1990 are most closely correlated with relative neighborhood improvement in each variable over the succeeding two decades. For example, low rents, a high fraction of “non-family households”, welfare recipiency and transit use were negatively associated with changes in home values over the 1990 to 2010 period.